European Factors to Watch - Shares to consolidate near 2-year highs

Tue Jan 29, 2013 7:19am GMT

LONDON, Jan 29 (Reuters) - European stocks were seen edging higher on
Tuesday, consolidating near two-year highs as optimism over a solid start to the
earnings season was mitigated by concerns that a string of upbeat U.S. economic
data may bring forward the end of monetary stimulus.    
    At 0712 GMT, futures for Euro STOXX 50 were 0.2 percent higher,
while contracts for Germany's DAX, France's CAC and Britain's
FTSE 100 were 0.1 percent higher.
    The pan-European FTSEurofirst 300 fell 0.2 percent to 1,172.99
points on Monday after touching an intra-day peak of 1,176.19 points, a level
not seen since March 1, 2011.
    The euro zone Euro STOXX 50 index closed steady at 2,744.50
points after setting a fresh peak of 2,753.93 in the wake of
stronger-than-expected U.S. durable goods orders, which showed that firms in the
world's largest economy had stepped up spending.
    Traders speculated more solid U.S. growth indicators might see the U.S.
Federal Reserve pull back on its aggressive easing stimulus, which has played a
key role in fuelling an equity market rally in the second half of last year.
    Investors were now awaiting the outcome of a two-day Federal Reserve policy
meeting due to start on Tuesday, as well as Friday's string of data, including a
key U.S. jobs report for further cues. 
    "With markets posting significant gains for the year already, traders are
becoming more demanding in their need for positive cues to keep up the buying
momentum," Jonathan Sudaria, a dealer at Capital Spreads, said in a trading
note. 
    "That call will be answered as some market moving data out of the U.S. is on
the itinerary over the next few days culminating in the jobs figure on Friday."
    The euro zone Euro STOXX 50 is up 4.1 percent year to date and
it has surged 27 percent since late July, largely boosted by stimulus programmes
from central banks across the world.
    Bond-buying programmes unveiled by the Fed and the European Central Bank in
the second half of last year were leading investors out of safe heaven German
Bunds and U.S. Treasuries and into equities, which offer higher returns.
    The Euro STOXX 50 has gained just over 1 percent since Jan. 3 and its
Relative Strength Index, a momentum indicator, has been capped just below 70
points, a level that indicates "overbought" conditions, suggesting a degree of
caution was setting in after the sharp rally.
    The pace of flows into equity funds also showed some signs of slowing,
despite outgaining bond funds for the seventh straight week last week, EPFR
Global data showed. 
    "Investors are taking their time. The client-base we speak to are still very
cautious after a few years of difficult market," said Johan Jooste, chief market
strategist for Europe, the Middle East and Africa at Merrill Lynch Wealth
Management.
    "Most of the retail and high-net individual client base we speak tend to
have a strong (fixed) income focus. As these assets have become more expensive,
they're forced into other ones and...(they) have to rethink their asset
allocation."
    
    REASSURING EARNINGS  
    The U.S. earnings season had also sent reassuring signals about the health
of global economies, with Internet company Yahoo among the latest
companies to report better-than-expected figures.
    With one third of the reporting season now complete, 73 percent of companies
that have reported results that have met or beaten expectations.
    While the European reporting season has only just started, with results out
from just 10 percent of companies due to report, early signs have been
moderately positive.
    Around 60 percent of companies that have reported so far have beaten or met
consensus estimates, Starmine data showed, although it is worth remembering
expectations had been significantly lowered last year.
    Philips Electronics reported in-line results on Tuesday and agreed
to sell its audio and video unit  to Japan's Funai Electric Co,
quitting one of its traditional businesses. [ID: nL5N0AY127]   

--------------------------------------------------------------------------------
  MARKET SNAPSHOT AT 0712 GMT: 
    
    
                                                     LAST       PCT CHG  NET CHG
 S&P 500                                         1,500.18       -0.18 %    -2.78
 NIKKEI                                         10,866.72        0.39 %    42.41
 MSCI ASIA EX-JP                                                  0.8 %     4.40
 EUR/USD                                           1.3441        -0.1 %  -0.0014
 USD/JPY                                            90.71       -0.14 %  -0.1300
 10-YR US TSY YLD                                   1.972            --     0.01
 10-YR BUND YLD                                     1.688            --    -0.01
 SPOT GOLD                                      $1,662.90        0.52 %    $8.56
 US CRUDE                                          $96.91        0.49 %     0.47
 

  
  > GLOBAL MARKETS-Asian shares rise, cautious before Fed, US data  
  > S&P 500 eases, ends longest winning run in 8 years              
  > S&P 500 eases, ends longest winning run in 8 years              
  > TREASURIES Prices ease as durable orders rise, supply looms     
  > Yen nears 2-1/2 year low vs dollar, Aussie firmer               
  > Gold near 2-1/2-week low as Fed meeting looms                   
  > LME copper up after promising US data; eyes Fed                 
  > Brent crude holds steady above $113 on positive U.S. data       
    
    COMPANY NEWS
    
    SANDVIK 
    The Swedish tool and equipment maker reported an adjusted operating profit
of 3.06 billion Swedish crowns ($477.20 million), missing the market's average
forecast of 3.3 billion.    
    
    TELIASONERA 
    A British court will decide this week whether Turkish tycoon Mehmet Emin
Karamehmet's company Cukurova can keep control of operator Turkcell, of which
TeliaSonera holds 37 percent, in a dispute with Russian billionaire Mikhail
Fridman's Altimo. 
    The dispute centers around a loan by British Virgin Islands-based Cukurova
from Altimo. It has left Turkcell unable for years to agree on the composition
of its board, to distribute dividends or to pursue a coherent growth
strategy. 
    
    ALLIANZ 
    Allianz and HSBC signed a 10-year distribution agreement that will see HSBC
selling Allianz life and pension products in Turkey and possibly other European
countries, Allianz said, adding it will pay HSBC 23 million euros to be the
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said on Monday. 
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rivals interested in buying NYSE Euronext's European stock exchanges,
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takeover now under scrutiny over alleged corruption but acknowledged accounting
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    The loss-making trades at the centre of a scandal at Monte Paschi were only
uncovered when new executives unlocked a safe at the bank's historic
headquarters in Tuscany. 
    
    INTESA SANPAOLO 
    CEO Tommaso Cucchiani told Corriere della Sera the Monte Paschi scandal was
an isolated case and that he saw not risk of contagion for the Italian banking
system. In an interview, he said there would be "systemic risk" if state help
was blocked.
    
    UBS 
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records from UBS AG of U.S. taxpayers suspected of hiding their income in
accounts with Swiss bank Wegelin. 
    
    REPSOL 
    Repsol will likely approve on Wednesday the sale of liquified natural gas
assets to Shell, reported newspaper Cinco Dias, citing sources close to
the deal.
    
    TELEFONICA 
    Spain's Telefonica has asked its banks to extend the maturity of 1.25
billion euros ($1.7 billion) of an existing 2 billion euro loan that expires in
July 2016, banking sources told Thomson Reuters syndicated loans news service
RLPC on Monday. 
    
    IBERDROLA 
    Spanish lender Kutxabank said on Monday its stake in utility Iberdrola fell
from 5 percent to 4.9 percent, after it opted to claim dividends in cash instead
of in shares. Iberdrola's payment of scrip dividends in shares to other
investors diluted Kutxabank's stake.